Machine Tool Orders Grow for 18 Consecutive Months

 

According to USMTO, machine tool orders in January 2012 were 1,771 units and $375,672,000. This was the 18^th consecutive month of annual growth for unit and dollar sales. The January annual growth rate for units, 37.0 percent, was still faster than at any other time since the mid ‘70s except for September 2004 to January 2005.

 

While the annual growth rate was still one of the strongest in the industry’s history, it is clear that the growth was slowing. Unit sales were at their lowest level since February 2011. And, unit sales in January 2012 were 3.2 percent less than they were in January 2011—the first decrease since December 2009. However, unit sales in January were just below my forecast. So, this should not come as a surprise.

 

Two of the most important leading indicators for machine tool sales are exchange rates and industrial production. Against all currencies, the dollar continues to gain value against other world currencies (on a monthly basis). Generally, when the dollar gains in value, machine tool sales slow down. On an annual basis, the dollar continues to contract, which is good for machine tool sales, but it is doing so more slowly. However, consumer durable goods industrial production is still at a strong level. One-month rates of change are still significantly positive and annual rates of change grew faster each of the previous five months. When industrial production grows faster each month, machine tool sales are stronger. With these two leading indicators counteracting each other, machine tool sales may be relatively stable in 2012—at least, as stable as machine tool sales can be.